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Survey shows major support to lift cap on craft beer distribution

North Carolinians have an insatiable taste for craft beers, and they have little tolerance for lawmakers who want to tamper with how they get their stouts and IPAs.

A survey of North Carolina voters bears that out.

Brewers around the state, some 180 of them, simply want what’s fair.

One goal of craftfreedom.org — a campaign by brewers to even the proverbial playing field with wholesalers — is, at least for now, eliminating a state law requiring brewers to procure a distributor once their beer output reaches 25,000 barrels.

The survey of 800 likely voters, prepared for Craft Freedom by Strategic Partners Solutions and overseen by Republican political consultant Paul Shumaker, finds the more voters learn about the impact of the production cap on North Carolina breweries, support for the production cap nearly completely vanishes.
(See summary of results here.)

That goes for people who voted for President Trump or his Democratic rival Hillary Clinton.

“When the voters who favor the production cap learn that producers lose their brand and marketing rights,” says the survey, “support for the cap diminishes to 1.6 percent” — two Republicans, three unaffiliated voters and eight Democrats from the 800 voters surveyed.

Voters want the General Assembly to enact regulatory changes to help the microbrewery industry grow in North Carolina, the survey says.

“Removing the production cap is not an issue about alcohol or beer — it is an issue about fairness and free-market principles. It is an issue overwhelming supported by Republicans, Democrats, and unaffiliated voters.”

Brewers — like other business owners — want to keep control of their businesses. To watch them grow and thrive, without interference from lawmakers, regulators, or distributors who want to maintain their own brand of control.

Distributors, though important in providing services for many producers, represent multiple brands and serve many masters, Ryan Self, director of sales for Olde Mecklenburg Brewery in Charlotte, said at a DecemberJohn Locke Foundation presentation. As a consequence, customer choice — the number of bars, taprooms, shelf space — becomes limited.

“When voters are informed that 96 percent of N.C. beer distributed by wholesalers are cheaper beer brands like Budweiser, Miller, and Coors, which are now owned by large foreign corporations, support for the production cap nearly vanishes among North Carolina voters,” the survey says.

“Equal to the fairness issue is the issue of foreign owned versus home-grown microbreweries. Lawmakers who support the production cap are taking a pro-foreign big beer stand over local homegrown business owners.”

Last week, state Rep. Michael Speciale, R-Craven, filed a bill that would increase the amount of beer smaller craft breweries could brew and sell without having to contract with a wholesale distributor.

House Bill 67 would increase the cap from 25,000 barrels per year to 100,000 barrels per year. A barrel of beer is 31 gallons.

At least three North Carolina craft breweries — Red Oak in Whitsett, and Olde Meck and NoDa in Charlotte — are approaching the 25,000-barrel threshold. The brewers, Carolina Journalreported, want to continue control over their distribution and plan to halt growth if the law isn’t changed.

“Today, distributors are in a power position,” says an August 2015 report on the website of the Center for Public Integrity, one of the country’s oldest and largest nonpartisan investigative news organizations. “[Distributors] can stifle the growth of craft breweries or small wineries by refusing to distribute their products. Or they can foster them by helping them reach customers they couldn’t efficiently reach on their own. Having separate distributors can also push up the price of alcohol.”

The powerful N.C. Beer and Wine Wholesalers Association will continue to push back. The wholesalers say the current arrangement works well, and removing the cap would provide a competitive advantage to a small group of North Carolina breweries to the disadvantage of everyone else, including other small breweries that appreciate the convenience of having a larger company handle direct sales and marketing.

Though the fight undoubtedly will continue, the latest Craft Freedom survey speaks to the will of the voters — nearly two-thirds of whom (64.6 percent) said they would be more likely to support lawmakers or candidates who back policies that encourage the growth of North Carolina’s microbrewery industry. Support crosses party lines, with 63.8 percent of Republicans, 64.1 percent of Democrats, and 67 percent of unaffiliateds standing with craft breweries.

The responses offer compelling evidence to “lift the cap.”

“While Craft Freedom wholeheartedly supports Representative Speciale’s efforts, we anticipate more legislation will be filed in the near future to holistically address the anti-competitive nature of our craft brewing regulations here in North Carolina,” Todd Ford of NoDa Brewing Co. in Charlotte says in an email. “We look forward to working with the leadership in the legislature to help take our Craft Brewing industry in North Carolina to the next level, which includes additional jobs and investments in our great state. We ask those who support our efforts to go to craftfreedom.org to sign the petition and help support our effort.”

The survey was conducted Feb. 8 and 9 and has an accuracy of plus or minus 3.46 percent at a 95 percent confidence level.

“Fairness and supporting free-market principles transcends social conservative concerns about beer,” the survey says. “If a production cap is to exist, then they would most likely favor that cap on foreign beer interests as well.”